Community Wind Handbook/Research Project Economics & Financing

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Community Wind Handbook

Research Project Economics & Financing

Generally defined as the amount of time it takes for a wind turbine to pay for itself through the energy it produces, the payback period for a project could be a determining factor regarding whether your small community wind project moves forward. Payback periods can range from several years to several decades, depending on system cost, the price of electricity, the incentives provided for the project, and the average annual wind speed at the hub height of the wind turbine. Small increases in wind speed can result in increases in potential output. A 10% increase in average annual wind speed, for example, results in a 33% increase in potential turbine output.[1]

Relatively small investments spent increasing the height of your project can yield very high rates of return in power production because you expose the turbine to higher wind speeds. For instance, a 5-kilowatt residential wind turbine on a 35-foot tower in an open area might produce 1,200 kilowatt-hours annually in a moderate wind regime. The same turbine on a 115-foot tower would generate 9,000 kilowatt-hours per year.[2]


The U.S. Department of Energy offers a Small Wind Economic Model, a spreadsheet tool that can help you analyze the economics of your small community wind project to help decide whether wind energy will work for you. To calculate payback, you must understand certain project details. According to Windustry, these include:

  • A reasonable wind resource estimate
  • Tower height
  • The system’s power curve (can be obtained from the manufacturer)
  • The installed cost of the turbine
  • Annual costs (maintenance, insurance, utility fees, etc.)
  • Cost of energy
  • Historical electricity consumption on a monthly basis, if available
  • Information from your utility about system size limits, net metering structure, and compensation rate for energy sold back to the utility
  • Loan interest rate for equipment purchased
  • Information about available grants and incentives.[3]

Windustry’s Small Wind Calculator is another payback calculator that can be utilized to analyze the economics of your project.

A small wind turbine adds value to a property, thus a property tax increase is possible. Many states offer property tax exemptions or other forms of property tax incentives for small wind systems. You can search the Database of State Incentives for Renewables and Efficiency (DSIRE) for more information regarding which states have established property tax exemption policies.

DSIRE also offers a database of available federal and state grant programs and other incentives for wind projects, including small community wind installations. A funding source that has historically supported wind energy installations is the Rural Energy for America Program (REAP). REAP offers various grants and low interest loans for projects. As of March 2009, the federal government offers a Residential Renewable Energy Tax Credit for the purchase and installation of qualifying small wind electric systems, worth 30% of the value of the system.

Also research whether your local utility currently offers any incentives for renewable energy projects. If you are considering speaking with an independent financial institution regarding a loan for your project, see the financing section of the Windustry website, which provides details of items to prepare prior to meeting with a banker.


  1.  "Sagrillo, M. Payback: The Wrong Question"
  2.  "Distributed Wind Energy Association. Tower Height"
  3.  "Windustry. Small Wind Economics"